Rio Tinto (RIO) will finally go ahead with the expansion of the Silvergrass iron ore mine in the Pilbara at a cost of $338 million.
Called a “brownfield expansion” the project will add 10 million tonnes of high quality iron ore to Rio’s Pilbara output.
Rio said in a statement last night the project “offers attractive returns, with an expected internal rate of return for this investment well in excess of 100 per cent and a pay back of less than three years.”
"It is a key element in maintaining Rio Tinto’s premium Pilbara blend, and also delivers incremental tonnage and lower unit costs.
"The investment will lower mine operating costs by replacing road haulage with a more efficient conveyor system that links the Silvergrass operations to our existing processing plant at Nammuldi.
Rio Tinto chief executive Jean-Sébastien Jacques said in the statement “We are committed to disciplined capital allocation and the approval of the final phase of the Silvergrass development, which is one of the most value-accretive projects across the mining industry, delivers high-quality, low-cost growth that will underpin future returns to shareholders.
“The additional low-phosphorus tonnes that Silvergrass delivers will sustain the long-term viability of our Pilbara blend, ensuring continued premium pricing, whilst also lowering our operating costs through infrastructure improvements.”
This final stage of the Silvergrass development is subject to obtaining necessary approvals from the West Australian Government.
